Software Shipments Create Patent Infringement Liability under 271(f)

In Eolas Technologies, Inc., et al. v. Microsoft Corp., (Fed. Cir. March 2, 2005), the court considered whether software code made in the United States and exported abroad is a "component[] of a patented invention" under section 271(f), which reads:

Whoever without authority supplies or causes to be supplied in or from the
United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such a manner as to actively induce the combination of such components outside the United States in a manner that would infringe the patent if such combination occurred within the United States shall be liable as an infringer.

Eolas alleged that certain aspects of Microsoft's Internet Explorer (IE) product incorporated its invention that allows a user to use a web browser in a fully interactive environment. Microsoft had exported a limited number of "golden master disks" containing the software code for the Windows operating system with IE to Original Equipment Manufacturers (OEMs) abroad who then used that disk to replicate the code onto computer hard drives for sale outside of the United States. The golden master disk itself did not end up as a physical part of an infringing product.

The "computer program product" recited in Eolas' claim 6 embodied the method of claim 1. Eolas claimed royalty damages under two patent claims for both foreign and domestic sales of Windows with IE. Microsoft moved, in limine, to prevent Eolas from seeking damages based on foreign sales under section 271(f).

The court began by noting that "Without question, software code alone qualifies as an invention eligible for patenting under these categorie sat least as processes. . . . Thus, this software code claimed in conjunction with a physical structure, such as a disk, fits within at least those two categories of subject matter within the broad statutory label of patented invention [in 35 USC 100-01]. "

The court then agreed with Eolas that software is, indeed "a component of a patented invention:"

Exact duplicates of the software code on the golden master disk are incorporated
as an operating element of the ultimate device. This part of the software code
is much more than a prototype, mold, or detailed set of instructions. This
operating element in effect drives the "functional nucleus of the finished
computer product." Imagexpo, L.L.C. v. Microsoft, Corp., 299 F. Supp. 2d 550,
553 (E.D. Va. 2003). Without this aspect of the patented invention, the
invention would not work at all and thus would not even qualify as new and
"useful." Thus, the software code on the golden master disk is not only a
component, it is probably the key part of this patented invention. Therefore,
the language of section 271(f) in the context of Title 35 shows that this part
of the claimed computer product is a "component of a patented invention."

. . .

Moreover, as the district court pointed out, process and product — software and hardware — are practically interchangeable in the field of computer technology. On a functioning computer, software morphs into hardware and vice versa at the touch of a button. In other words, software converts its functioning code into hardware and vice versa. Thus in the context of this patented invention, the computer transforms the code on the golden disk into a machine component in operation. Thus, sound policy again counsels against varying the definition of “component of a patented invention� according to the particular form of the part under consideration, particularly when those parts change form during operation of the invention as occurs with software code.

The court als0 went on to review the language and history of section 271(f)(1) to support its holding that section 271(f)(1)’s "components" include software code on golden master disks.